Smart Spending Strategies for Kids
By: Kate Hennessy, CFP®
Our daughters like to spend money and since we fund most of their purchases, it’s difficult for my husband and me to quantify how much they spend each week. Like most of us, our kids spend money on items that bring them joy, such as ice cream and beauty products. As our oldest has gained more independence and the ability to spend more time outside the home with her friends, her spending has increased. We realized that there must be a better way for us to track how much we were giving her and how much she was spending. After researching solutions and talking with friends we decided to try the Greenlight app. While it’s an app, their solutions also includes a physical debit card for each child, and the card is linked to our checking account. We set up a weekly allowance for each daughter which they receive for doing chores. In addition, our older daughter babysits, and when she is paid in cash, instead of walking around with that cash, she gives it to us and we credit her Greenlight debit card.
The debit cards have had a positive impact on how our kids spend their money. For example, we were at Target recently and they wanted to buy Halloween decorations for their rooms. I reminded them how much they had on their debit cards and what they could afford and knowing their current balances helped them make a better purchasing decision.
In a world where you can make purchases instantaneously, it's critical to teach kids early about the basics of spending and saving money. If you’re interested in learning how best to do so, here are a few resources:
https://brightchamps.com/blog/teaching-financial-literacy-for-kids/
https://www.fidelity.com/learning-center/personal-finance/kids-and-money
We anticipate that the spending lessons our kids are learning early in life will help them to make better informed spending decisions as they continue to grow.